Contrary to expectations, the Bank of Japan’s boldest steps yet to boost a flagging economy have triggered a swift change in course for a falling yen, which overnight saw its biggest one-day rise against the U.S. dollar in eight months.
And, some foreign exchange strategists believe the downward move in the safe haven currency – which has depreciated 11 percent against the greenback in the past three months – is now likely to pause.
Since Japan’s central bank announced on Tuesday it would double its inflation target to 2 percent and commit to an open-ended asset purchase program starting in 2014, the yen has strengthened over 1 percent against the U.S. dollar. The country’s benchmark Nikkei 225 stock index meanwhile closed down 0.4 percent on Tuesday and continued its fall on Wednesday.
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